Mexicana suspends ticket sales

SECOND UPDATE: Mexicana suspended all flights Aug. 28, including domestic runs flown by its subsidiaries, Mexicana Click and Mexicana Link. The new owners, Tenedora K, failed to adequately slash costs, which it reportedly tried to do by firing the unionized flight attendants and pilots and then rehiring some of the staff at reduced salaries. The federal government rejected the plan and refused to bail out Mexicana, which was privatized in 2005 and run up more than $1 billion in debt.

What becomes of Mexicana remains uncertain. I always preferred Mexicana to its domestic competitor AeroMéxico, which, in my experience, hired less-friendly and less-resourceful staff who were always anxious to pass the buck and neglect customer service problems. Other airlines such as Interjet, Volaris and Vivaaerobus - all of which are less than five years old and have lower cost structures than Mexicana - will fill some of the void on domestic runs and AeroMéxico and other competitors will no doubt add international flights. I'll definitely miss the direct runs back to Canada, though. It's possible some airlines such as Air Canada or Westjet will expand service, but the Canadian government's visa requirement for Mexican travelers dampened enthusiasm for flights to Canada and AeroMéxico abandoned its Canadian runs earlier this year due to a lack of demand.

UPDATE:

Mexicana has stopped selling tickets effective 6 p.m. Aug. 4 for travel on its mainline carrier, which flys international runs and many of the high-volume domestic routes such as Mexico City-Monterrey, Mexico City-Cancún and Mexico City-Tijuana. The company said in a statement that it will continue selling tickets for domestic travel on its subsidiaries Mexicana Click and Mexicana Link as the operations of those airlines is unaffected by the financial and labour woes of Compañía Mexicana de Aviación.

Mexicana employees about to get a haircut

Compañia Mexicana de Aviación has filed for bankruptcy protection in both Mexico and the United States, in a move the Wall Street Journey said in a cheeky headline, "Wards off the repo man."

Mexicana de Aviación wants its pilots and flight attendants to take pay cuts of roughly 40 percent in order to keep the company from going broke. The Mexicana employees rejected the proposed paycuts on Aug. 2 - along with an offer to buy the mainline part of the airline for just 1 peso.

Financial problems and subsequent labour unrest are just the latest patches of turbulence for Mexicana, an 87-year-old airline that company officials say has lost more than four billion pesos since being re-privatized in 2005.

The airline on Aug. 2 canceled service on three runs, reduced frequencies on others and altered routing on many flights, which will now make a stop in Mexico City. Creditors had its planes held in Calgary, Montreal and Chicago. Mexicana says its operations will carry on as scheduled and its employees' unions say their members won't stop working.

Mexicana management says cuts need to made immediately for the carrier to survive. It's subsidiaries Mexicana Click, which operates many domestic runs, and Mexicana Link - a commuter-jet airline - are unaffected by the turbulence.

Pilots at Mexicana earn US $216,000 per year, while flight attendants earn US $52,000 per year. Under the management plan, pilots would earn US $127,000 per year. Flight attendants would earn $32,000 per year.

The company outlined plans to slash its labour force by 40 percent, too. The pilots' union said the company was distributing "inexact" statistics. It also said, "It's a shame they value it for one peso."

The federal government has declined to become involved in Mexicana's problems.

Is Mexicana de Aviación about to go broke?

A jet from the defunct carrier Avolar sits by the terminal at the Oaxaca airport

Airline pilots and staff marched through Terminal 1 of the Mexico City airport on Sunday, demanding that money-losing carrier Mexicana de Aviación leave its employees' generous salary and benefit packages intact and stating emphatically that they're not to blame for the company's problems.

In short, Mexicana is going broke and is asking pilots and flight attendants to take cuts to their salaries and benefits. The airline also proposed job cuts and asked that its pilots buy the airline for one peso (less than 10 cents.) The pilots rejected those offers.

The pilots and flight attendants at Mexicana are very well paid - and their salaries are among the most lavish in the industry. The Mural newspaper reported Mexicana pilots earn more than $220,000 per year - far more than their counterparts in the U.S., who earn an average of $150,000 per year. Mexicana is asking its pilots to take a 41 percent pay cut. Flight attendants were asked to take a similar pay cut from their wages of $52,000 per year.

Mexicana is deeply in debt and a Canadian creditor recently had two Mexican carriers planes ordered held while at airports in Calgary and Montreal, forcing the cancellation of flights. Any problems at Mexican only impact the mainline operations, which is responsible foreign flights and many of the runs between Mexico City and the destinations of Tijuana, Monterrey and Cancún. Domestic operations on Mexicana subsidiaries Mexicana Click and Mexicana Link are unaffected and employee costs on those fleets are substantially less than on the mainline carrier.

All of the Mexicana action comes as the FAA downgrades Mexico's air safety rating. It launched the review following the November 2008 crash of a private jet in the swank Lomas de Chaputepec neighbourhood that claimed the life of the then interior minister Juan Camilo Mouriño.

The Mexican aviation has long been financially troubled as Mexicana and rival AeroMéxico were government-owned, but operated as separate units, from the mid 1990s - following the peso crisis - until Mexicana was sold in 2005. AeroMéxico was sold in 2007. Other airlines to go bust in recent years include AeroCalifornia - famed for flying old planes and providing tardy service - Aerolineas Azteca, Aviacsa, Alma de México and Avolar.

Two lower-cost airlines have flourished, however: Interjet and Volaris - both of whose costs are much lower than those at Mexicana or AeroMéxico. Carlos Slim recently sold his share of Volaris, prompting questions about the state of the industry. (Slim's not known to abandon a good investment.)

Or perhaps aviation is just too competitive. Slim, of course, has become fabulously wealthy operating in the competition free - at least it was for decades - domestic telecommunications market. (Slim likes to boast how his companies face stiff competition in other markets and is facing growing competition in Mexico.) But while the government abides businessmen like Slim and monopolistic companies in sectors such as broadcasting, brewing and cement, it steadfastly refuses to allow consolidation in the aviation sector and permit the creation of a flag carrier.

With Interjet and Volaris on the scene, the new flag carrier would face at least some competition from companies being operated much more efficiently than either AeroMéxico or Mexicana. But for mysterious reasons, aviation remains the one industry in which the government refuses to allow consolidation.

Supposed "Jefe Diego" letter and photo surface

A supposed photo of missing former presidential candidate Diego Fernández de Cevallos surfaced online, suggesting the National Action Party (PAN) politician and Mexican legal bigwig is alive - if not well.

The photo, made public by journalist José Cárdenas of Raido Formula, shows a blindfolded, shirtless and disheveled Fernández de Cevallos, 69, holding a copy of the muckraking news weekly, Proceso, which features his image on the cover. That image ran with the headline, "Diego's dark history," and contained an unflattering account of the political, business and legal dealings of a figure deeply despised by the Mexican left and unpopular in some circles of the governing PAN.

Cárdenas also produced a letter supposedly written by Fernández de Cevallos to his family. The letter - which lacks any sort of polish or the prose for which Fernández de Cevallos, a gifted orator, is known - begins with an admonishment to quit penny pinching and to pay any ransom as quickly as possible. It reads:

"I can't describe the hell that your father is living and I don't know much longer I'll hold on. Therefore, I ask that you make your best effort as quickly as possible. They have all the time in the world.


"... They tell me that they made you a concrete proposal and that you haven't answered them with a reasonable counter offer. You have to do it now, immediately.


" ... Any advice that you're poor is absurd and will be fatal."

Diego then supposedly writes of his poor health, saying:


"I've fainted various times and have chest pains despite [taking] a lot of 'Tenormin' and Aspirin. You know that I've not hot had good heart health since the operation.


"I have lost weight and my fatigue is each day worse. Therefore, time if of the essence."

He ends the letter with an urgent plea:

"Don't try to diminish the amount that is attributed to my net worth. That's irrelevant. What's urgently needed is that you make a counter proposal that's as high as you are able [to make] and I'm sure that they will negotiate. What is urgently needed are serious negotiations to manage the delivery of money and my freedom."

The admonishment to pay follows reports of the supposed kidnappers demanding a ransom of $50 million and the family offering $30 million in exchange. Negotiations reportedly went cold afterward.

Fernández de Cevallos - known as "El Jefe Diego," or "Diego the Boss" - disappeared more than two months ago from his ranch in the state of Querétaro, several hours to the northwest of Mexico City. His family has kept quiet, except to ask that federal and state officials withdraw from any investigations - this, in spite of the fact that close legal and political associates of Fernández de Cevallos - Attorney General Arturo Chávez Chávez and the recently replaced interior minister, Fernando Gómez-Mont - occupied top positions in the federal cabinet at the time of his disappearance.

Speculation has been rife about who might have abducted Fernández de Cevallos and for what motives. The EPR rebels denied any involvement, although security analyst have mentioned a supposed EPR splinter group as the kidnappers. A supposed email from the kidnappers - read by Cárdenas on his radio show - says much of what has been reported is false and that they have not lowered their demands.

If the photo is real, it should come as no surprise that it shows "El Jefe Diego - or, "Diego the Boss" - holding a Proceso issue suggesting he has amassed a fortune and wields influence over Mexican political and legal affairs.

The Proceso editorial line tilts left and Fernández de Cevallos is loathed by many on the Mexican left for his history of brokering deals with former president Carlos Salinas and later, while serving as a PAN senator from 2000 - 2006, winning big claims for corporate clients taking legal action against the federal government - often in a bid to win "amparos" (injunctions) against taxation measures.

Many reports falsely refer to Fernández de Cevallos as friends with Calderón, whose sister, then a Senator, promoted a bill known as the "Ley Anti-Diego" to curb Jefe Diego's moonlighting as a lawyer while he served in the Senate.

Xóchitl Gálvez gives it the "old college try"

Xóchitl Gálvez, the PAN-PRD gubernatorial candidate in Hidalgo, awarded 10,000 pesos yesterday to the video best purporting to show irregularities in the July 4 state election, which the PRI won by a five-point margin - much closer than expected and especially close given the state government's backing of the PRI campaign. The Gálvez campaign has raised allegations of irregularities that range from vote buying to the police raiding one of her campaign buildings on election day to the PRI governor of the neighbouring State of Mexico sending in trailer-loads of giveaways for plying voters.

The award stunt was the latest action in her attempt to have the election overturned - something that hasn't happened on the state level since the electoral tribunal (Trife) overturned the 2003 election in Colima state. (Ironically, a 2008 municipal election was overturned in Zimapán, Hidalgo, site of a proposed toxic waste dump after the pro-dump PRI complained that the local priest had preached politics by the pulpit by voicing opposition to the project in his election day homily.)

Her odds of success in overturning the election are uncertain, but Gálvez has emerged from the July 4 elections as one of the nation's rising political stars.

The Gálvez campaign confronted an electoral machine operated by one of the most retrograde PRI state governments in the country - a place where the governor went so far as to change the state anthem to something glorifying the PRI and state media outlets, which are considered friendly to the PRI and, no doubt, dependent on state government advertising, gave the PRI campaign five times the coverage it gave her. She received less support and publicity from her own party backers than was given to similar coalitions running in Oaxaca and Puebla. Gálvez went so far as to remove her family from the state on the eve of the elections and mentioned having some campaign members threatened by Los Zetas.

She even had to deal with a scorned Andrés Manuel López Obrador, who demand the Labour Party (PT) pull out of any coalitions in Hidalgo because of her presumed closeness with former president Vicente Fox (in whose administration she served as commissioner of the Indigenous Communities Development Commission).

"She gave it the old college try," said ITAM political science professor Federico Estévez.

Whether or not she wins in the tribunals, Gálvez - who is not a member of any political party - has emerged as one of the political stars of the July 4 elections and should be factor in Mexican politics over the coming years.

The job nobody wants

Former PAN president Germán Martínez and Dep. Josefina Vázquez Mota speak at a spring 2009 press conference.

Proponents of the suddenly popular and surprisingly cohesive PAN-PRD alliances have set their sights on taking the State of Mexico next year - and subsequently derailing the presidential aspirations of the outgoing PRI governor, Enrique Peña Nieto. But the proponents continue encountering a decided lacked of enthusiasm from any of the potential candidates, some of whom would prefer running for the presidency in 2012 instead of being relegated to a provincial backwater in Toluca.


Writing in the newspaper El Universal, columnist Salvador García Soto mentioned former UNAM rector Juan Ramón de la Fuente as the latest big name to demur on the possibility of running next year in the State of Mexico. The former rector, García Soto writes, is being courted by the coalition, but would prefer to run on the federal level as a "citizen candidate." (Mexico doesn't allow independent candidacies so "citizen candidates" are considered party candidates who lack party membership cards.)

García mentioned sporting goods retail mogul-turned-anti-crime fighter Alejandro Martí as another potential "citizen candidate" in the State of Mexico. Martí became prominent in the summer of 2008, when public outrage surged after it was revealed his teenage son Fernando Martí was kidnapped and murdered, even though a ransom had been paid.

PAN leader in the Chamber of Deputies, Josefina Vázquez Mota, has frequently been mentioned as a possible candidate, too. She recently let it be known she has no interest in running for governor of the State of Mexico, however - even though she is perhaps the best-known panísta in the state, which is the most populous in the country and surrounds Mexico City on three sides.

De la Fuente presided over the UNAM for much of the last decade. He took office in the wake of a student strike over a proposed tuition increase - which was unreasonably lengthened by the obstructionism of a small band of resident radicals, who tarnished the school's reputation - and led it back to reasonable levels of respect in national and international circles. (UNAM still charges no tuition.)

A psychiatrist by training, de la Fuente has been promoted as a possible unity candidate for Mexico City mayor in 2012 or president in the same year by some in the oft-disparate and oft-dysfunctional Mexican left.

Vázquez Mota has showed an equal lack of enthusiasm for running in the State of Mexico, even though the PAN's central leadership and operatives in the presidency - who are known to dislike her and have aspirations for other potential 2012 presidential candidates - have encouraged her to move to the state level.

The former education and social development secretary could buck that pressure, however. Vazquez Mota draws relatively favourable poll numbers and is running just behind Sen. Santiago Creel - another Los Pinos enemy - for the PAN presidential nomination. PRD leader in the Chamber and for Mexico City mayor Alejandro Encinas has also been mentioned as another possible State of Mexico candidate.

All of the potential opposition candidates poll far below Peña Nieto the 2012 race - and none seems to want his current job.

Peña Nieto, meanwhile, continued with the public works narrative of his administration by inaugurating a hospital Monday in Chalco, a sprawling metropolis founded by squatters on the southeastern outskirts of Mexico City. The hospital was the 500th project his government has taken credit for completing - and many of the media outlets that have tirelessly gushed over his administration were there to cover the event. (It must be asked how many of these outlets have pages sponsored by the State of Mexico government.)

He emerged from the July 4 gubernatorial elections in worse shaped than he entered, however. Peña Nieto campaigned hard in places such as Oaxaca, Puebla and Hidalgo with the idea that PRI governments in those states would back his 2012 presidential run - no doubt, using public funds. (The PRI lost in Oaxaca and Puebla, while the Hidalgo election is being contested to the electoral tribunal.)

But some in the PRI think the losses in other places might help to keep the State of Mexico in party hands as Peña Nieto will be less able to impose a preferred candidate through the "dedazo" - a practice that backed fired horribly on the PRI in Oaxaca and Puebla - and potential infighting in the state will thus be kept to a minimum.

More electoral twists for 2011?

How much does State of Mexico Gov. Enrique Peña Nieto fear the formation of anti-PRI electoral alliance for the July 2011 gubernatorial race in his home state? Apparently enough to postpone the election date to July 2012, when the country chooses a new president - and he expects to romp to victory as the Institutional Revolutionary Party candidate.

Writing in the Mexico City newspaper La Razón, political columnist Adrián Trejo floated the idea of Peña Nieto promoting a constitutional amendment so that the State of Mexico would hold future gubernatorial elections at the same time as federal elections. The state already holds legislative and municipal elections at the same time as the presidential contest and other states such as Jalisco, Guanajuato, Michoacán, Morelos and the Federal District already hold gubernatorial elections the same day.

The scenario, according to Trejo, would unfold as follows:

The heavily PRI state legislature approves changing the election date to July 2012. Peña Nieto then resigns Sept. 15, one year ahead of his previously scheduled departure from office. A successor appointed by the legislature would serve out the remainder of the extended term.

Trejo says the idea is being studied, although it would bring a high political cost. He cited no specific sources for his July 16 column and insisted such a change to the gubernatorial election date would be legal.

The possible maneuvering reflects the enormous importance of the State of Mexico in national politics and how its next gubernatorial election is expected to have national implications.

Emboldened by the recent electoral successes of PAN-PRD alliances in Oaxaca, Puebla and Sinaloa, the PAN and PRD now are gunning for the State of Mexico as winning the country's most populous state would derail Peña Nieto's presidential aspirations.

The PRI recognizes the importance of retaining the State of Mexico, too. PRI president Beatriz Paredes brokered a deal last fall with PAN president César Nava to avoid any such coalitions in the State of Mexico in exchange for the PRI in the Chamber of Deputies supporting passage of the 2010 federal budget. (The PAN reneging on the deal prompted the resignation of the then-interior minister Fernando Gómez-Mont from the PAN and hastened his departure from cabinet.)

It remains to be seen what happens in the State of Mexico, but the maneuvering for the top political prize of 2011 is only just beginning.

Gómez-Mont resigns - to no one's surprise

Fernando Gómez-Mont (left) appears at a 2008 press conference with then-PAN president Germán Martínez. Gómez-Mont subsequently became interior minister, but resigned his position July 14.

Interior Minister Fernando Gómez-Mont resigned Wednesday evening, barely a week after three of the PAN-PRD electoral alliances he had harshly criticized - and ultimately cited as motives for resigning from the PAN - unseated retrograde PRI state governments in Oaxaca and Puebla and scored an unlikely victory in Sinaloa.

President Felipe Calderón promptly unveiled a new interior minister, former Baja California government secretary José Francisco Blake Mora - who was barely a week removed from presiding over a PAN electoral debacle in his home state, where the PRI won all five municipalities, including Tijuana, and claimed a majority in the state legislature.

Blake Mora arrives in the Interior Ministry - arguably the most powerful of the federal ministries - with only modest experience in federal politics, having served in the Chamber of Deputies, Baja California legislature and Tijuana city council. The PAN has governed Baja California since 1989.

The new interior minister worked as a Calderón's political operator in the Chamber of Deputies early in the last decade and gained notoriety for spearheading an unsuccessful move to strip lawmakers belonging to the oil workers' union - which was engulfed in the Pemexgate scandal - of their immunity from prosecution. He reportedly spurned previous invites to serve in the federal cabinet.

The departure of Gómez-Mont came as part of a larger cabinet shuffle in which the president replaced one of his closest advisers, Patricia Flores, from Los Pinos and tapped Economy Secretary Gerardo Ruiz Mateos to replace her as director of the president's office.

Flores was expected to be named ambassador to Portugal. Ruiz raised hackles in 2008 for suggesting that if Calderón hadn't won in 2006, narcos would be running the country.

It marked the fourth time in less than four years that Calderón named a new interior minister. Gómez-Mont replaced Juan Camilo Mouriño - Calderón's closest ally during the early years of his administration - in November 2008 after Mouriño perished in a plane crash. Mouriño had replaced current Chamber speaker Francisco Ramirez Acuña, who was deemed a poor political negotiator.

No one ever questioned Gómez-Mont's negotiating talents. He formed a formidable PAN negotiating tag-team with his legal and political mentor, the currently missing former presidential candidate Diego Fernández de Cevallos - who is eroneously mentioned in many press reports as being a close friend of Calderón. They negotiated many of the early electoral reforms that led to an independent IFE and brokered many deals with the administration of then-president Carlos Salinas.

Gómez-Mont's appointment to the Interior Ministry was interpreted at the time as an attempt by Calderón to build party unity by reaching out to PAN factions that never embraced his 2006 candidacy.

But the Gómez-Mont later resigned from the PAN over the party's willingness to broker alliances with the PRD - a party which has never accepted the 2006 election results. Both Gómez-Mont and Fernández de Cevallos strongly disliked the Mexican left, according to political observers. He also infamously served as "witness" to a deal between the PAN president César Nava and PRI president Beatriz Paredes to have no coalitions next year in the State of Mexico - all in exchange for the PRI backing a 2010 budget with a sales tax increase. It was believed many in the PRI - including Oaxaca Gov. Ulises Ruiz - had tried broking deals with Gómez-Mont to avoid the formation of PAN-PRD alliances.


Gómez-Mont, says analyst Pedro Isnardo de la Cruz of the UNAM political science department, presented problems in his role of a negotiator between the presidency and the other political parties. The PRD distrusted him - and blamed him, without offering proof, of having its gubernatorial candidate in Quintana Roo arrested on organized crime charges - while parts of the PRI viewed him as biased toward the faction loyal to State of Mexico Gov. Enrique Peña Nieto.

Gómez-Mont is expected to return to private practice as one of the country's most esteemed criminal defence lawyers.